U.S. Senator Thom Tillis (R-N.C.) said on May 5 that a legislative compromise on stablecoin regulation would prohibit rewards from resembling interest on bank deposits while allowing other forms of customer rewards. Tillis made the statement in a post on X as Congress considers the CLARITY Act, which would establish a framework for digital asset oversight.
The debate over stablecoin rewards has drawn attention from lawmakers, banks, and crypto firms. U.S. Senators Tillis and Angela Alsobrooks (D-Md.) proposed language that would prohibit crypto firms from offering stablecoin-balance rewards that are “economically or functionally equivalent” to interest-bearing bank deposits, while allowing some activity-based rewards for users, according to Banking Dive.
Tillis said the compromise was intended to address banking industry concerns about deposit flight without blocking all crypto customer rewards. He said the proposal would “avoid letting the perfect become the enemy of the good” while providing regulatory certainty for digital asset innovation, in his post on X.
The Treasury Department and Commodity Futures Trading Commission would issue rulemaking to determine which products and scenarios qualify as equivalent to yield rewards, according to Banking Dive.
Banking trade groups said the Tillis-Alsobrooks proposal seeks to prohibit yield and interest on stablecoins but argued that the proposed language falls short of that goal. The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America said yield-earning stablecoins could reduce consumer, small-business, and farm loans by 20% or more, according to the American Bankers Association.
Tillis was first elected to represent North Carolina in the U.S. Senate in 2014 and is serving his second term after being reelected in 2020. He is a member of the Senate Finance Committee, Veterans’ Affairs Committee, Banking, Housing, and Urban Affairs Committee, and Judiciary Committee, according to his official biography.
